Starting A Business

Question 1

What is a business

Answer 1

An organisation that provides goods or services to its customers

Question 2

Why are businesses started

Answer 2

For money, potential for lots of it
Personal reasons such as being own boss
Helping others like charities

Question 3

What causes most businesses to start

Answer 3

When someone decides they can provide a product or service that fills a gap in the market that people will be willing to pay for

Question 4

What does enterprise mean

Answer 4

A personal quality that someone may processes if they are able to see and take advantage of business opportunities

Question 5

What is a a market niche

Answer 5

A small part of a larger market made up of customers with a particular need

Question 6

What is a entrepreneur

Answer 6

Someone who starts up a business in the hopes of making money

Question 7

Qualities of good entrepreneurs

Answer 7

Think ahead
Initiative
Drive and determination
Deceive
Networking skills, find investors
Leadership and persuasive skills
Risk taker
Good planner
Learn from mistakes

Question 8

Advantages and disadvantages of being a sole trader

Answer 8

Easy to set up
You are your own boss
Run everything in the business and control all profits

Long hours and almost no holidays
Unlimited liability, personally responsible for all debts
Business dies when you leave it, no continuousy

Question 9

What is a partnership

Answer 9

Two or more sole traders working together, each have equal say in the decisions and an equal share of profits unless deed of partnership says otherwise

Question 10

Advantages and dis advantages of partnerships

Answer 10

More owners means more ideas and more people to share work
More capital can be invested into the business

Each partner legally responsible for what every other partner does
Unlimited liability, only a few have limited
More disagreements, not one person in control

Question 11

What are private limited companies

Answer 11

Small businesses with limited liability, must have a memorandum of association and an article of association.
They are owned by shareholders, more shares means more control

Question 12

What is this memorandum of association and the article of association

Answer 12

Memorandum tells the world who the business is and where it’s based
Article sets out how the business will be run

Question 13

Advantgaes and disadvantages of ltd

Answer 13

Limited liability, if business is in huge debt, you don’t have to pay with personal items
Business can be passed onto others by giving them shares

More expensive to set up as lots more paperwork
Have to publish accounts every year

Question 14

What is a franchise

Answer 14

The right to sell another firms product and brand

Question 15

What is franchising

Answer 15

When a company allows someone else to sell there product and use their trademarks in return for a small fee

Question 16

What is a franchisor and franchisee

Answer 16

Franchisor sells the rights and franchisee buys it and sells its products

Question 17

Advantages and disadvantages of buying a franchise

Answer 17

Buys the rights of an established product so less risk of failure
Franchisor will help you as it will promote the rand
Training, instructions and other things such as staff management and accounting may be provided

Won’t be able to sell own products, only the franchisors
Have to follow franchisor rules such as particular furniture and opening hours

Question 18

Being a franchisor pros and cons

Answer 18

Increase market share without increasing their own firm
Cheap and fast way to expand

Don’t make as much money as franchisee gets some
If a franchisee has poor standards and messes up, the image of the whole brand may get tainted

Question 19

What is an aim

Answer 19

An overall goal a business wants to achieve, it can change after its achieved such as survival, profit and then growth

Question 20

What are objectives

Answer 20

Like aims but more short term like stepping stone on a path towards achieving the main aim. They are more specific such as 10% growth over the next year or increase production by 20% in 6 months

Question 21

What are stakeholders

Answer 21

Anyone with interest in the business and/or is affected by a business. They can be internal or external

Question 22

What is a business plan and why are they so important

Answer 22

An outline of what a new bus Ines will do and how it will do it. It contains information on things it needs to workout start up capital and can be used to convince investors to invest if they apcan show the business will be successful. Also can show owner and financial backer whether or not it’s a good idea so they can back out before wasting too much time or money

Question 23

7 parts of a business plan

Answer 23

Personal details: CV, who they are, other key people
Mission statement: “To combine fresh bread and tasty fillings and to become the market leading shop”
Objectives
Product description: detail on market and competitors. How business will be unique, what is its usp
Staffing requirement: how many personnel needed and their job description
Finance: how much money needed, cash flow forecast, profit loss account and balance sheets should be included

Question 24

Seven influencées of location

Answer 24

How far raw materials are, don’t want to be too far
Transport, will rail be needed? Transport price and distances
Labour supply, is there lots of unemployment, if yes wages can be low
Economies of concentration: being near competitors means suppliers are local and customers know where to go
Communication links, network, internet, postal services
Government policy, may give grants and benefits if you open in an area of unemployment
Location of market, better to be in a high street or industrial estate